Last December, a consultant hired by former Gov. Linda Lingle produced a report questioning the financial assumptions the City and County of Honolulu made in planning its controversial rail project.

Honolulu Mayor Peter Carlisle blasted the findings, calling the report “shoddy” and “biased.”

But despite the mayor’s public posturing, the city took at least part of the report to heart and lowered its projections for federal support by $300 million.

The new released earlier this year changed the forecast for Section 5309 “Bus Discretionary” funds from $419 million to $117 million. It said the adjustment was made “to reflect the year-to-year variations in this discretionary program. The forecast now based on City average historical receipts of 5309 bus discretionary funding.”

The independent report by Infrastructure Management Group (IMG) had identified the bus money as one of the city’s faulty financial assumptions.

The April 2011 Draft Financial Plan for Entry Into Final Design is more than five months old, and we wrote about it when it first came out and didn’t touch on Section 5309 funding. We stumbled on the new bus discretionary projections when researching our Fact Check about operating subsidies for rail — FACT CHECK — Rail Opponents: City Needs $100M Per Year To Keep Trains Running.

Back in December, Civil Beat evaluated the bus discretionary grant projections as part of its series comparing the city’s and . We determined that the city’s estimate was questionable.1

Our conclusion was based on three important facts:

  1. The city’s predicted haul of more than $40 million in those bus grants in some years was far and away more than any city has received in bus grants in the last 15 years, the time period for which data is available.
  2. The bus grants were, at that point, distributed via earmarks. Sen. Daniel K. Inouye, as chairman of the Appropriations Committee, had lots of discretion in distributing federal funds through earmarks. The earmark system has since been dismantled, dealing a further blow to the city’s ability to secure discretionary federal funds.
  3. IMG said it would be tough for the city to receive such sizable bus grant allocations from Congress at the same time it’s receiving $1.55 billion in New Starts funding, expected to pay for about one-third of the rail’s construction costs.

Those factors led IMG to predict in its “Base Case” model that Honolulu would receive about $166 million in Bus Discretionary funding from 2009 through 2030, more than $250 million lower than the city’s $419 million figure.

The city’s new financial plan goes even further, now projecting even lower bus discretionary grant receipts — $117 million through 2030 — than IMG had predicted.

Carlisle said it was shoddy. But the rail financial team now says it was right.


  1. That finding helped us reach the final conclusion that while IMG made some errors in its analysis, the city had been overly optimistic in a number of ways. The five-part series — Civil Beat Conclusion: Honolulu Rail Report ‘Shoddy,’ ‘Biased’ — and Right? — won the Society of Professional Journalists-Hawaii award for best government reporting in 2010.
     

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